Post on 31-Mar-2015
transcript
Federal Income Tax
Charitable Contributions
2
Itemized Deductions
• Medical
• Taxes• Interest• Charitable
Contributions• Casualty Losses• Other
3
Charitable Contributions
A. Alice has AGI of $22,000. During the year she made the following cash contributions:Girl Scouts $3,000Local Church 6,300Oral Roberts University 3,000Tulsa University 300University of Texas 300University of Oklahoma 300
$13,200
In each of the following independent cases, indicate the amount that may be deducted as charitable contributions.
Limited to 50% of AGI $11,000Excess carried over for 5 years
4
Charitable Contributions
B. Bernard had AGI of $16,500. During the year he made the following cash contributions:Boy Scouts $5,000Democratic Party 2,000Needy family in neighborhood 400American Legion 200London School of Economics(England) 800Local Hospital 1,000
Republican
5
C. Cinde operates a retail furniture store. In July of this year she contributed to the local hospital a number of items of furniture (tables, chairs, and sofas) from her merchandise inventory. These items had cost her $3,800 but had a normal retail value of $7,400. Cinde’s AGI this year was $20,000.
Charitable Contributions
Determining the Contributions DeductionFor Gifts to PUBLIC Charities
Cash?
Yes
Deductible up to 50% of AGI *
No
Capital GainProperty?
Yes
No
Both tangibleand personal?
Is FMV <Adjusted Basis?
Yes
Deduct FMV up to 50% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
No
Yes
Used inexempt
function?
No
No Deduct FMVup to 30% of AGI *
Deduct Adjusted Basis up to 50% of AGI *
Yes
ChooseOne:
* Excess amounts may be carried forward for 5 years
Copyright © 2000 by M. Ray Gregg. All rights reserved.
YesDeduct FMV
up to 30% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
NoIs FMV <
Adjusted Basis?
Cash?Generally…
•Personal use
•Held > 1 yearIs FMV <Adjusted Basis?
Deduct Adjusted Basis
Up to 50% of AGI
No
No
No
8
C. Cinde operates a retail furniture store. In July of this year she contributed to the local hospital a number of items of furniture (tables, chairs, and sofas) from her merchandise inventory. These items had cost her $3,800 but had a normal retail value of $7,400. Cinde’s AGI this year was $20,000.
Charitable Contributions
Deduct Adjusted Basis
Up to 50% of AGI
9
D. Dewayne purchased five tickets from the Boy Scouts. These tickets were to a local benefit performance of the city symphony, with all proceeds going to the Scouts. Normal cost of
Charitable Contributions
these tickets would have been $10 each, but because they were for a benefit, the cost of $15 each. Dewayne and his family attended the performance, using all five tickets.
5 x ($15 – 10) = $25
10
D. Assume the same facts except Dewayne bought the tickets as a purely charitable gesture with the intent of throwing them away – and he did so.
Charitable Contributions
5 x ($15 – 10) = $25
11
E. Eugene is active in the Boy Scouts. During the past year he served as a scoutmaster. At the end of the year he calculated that he had spent $80 for various scout activities such as fund-raising drives. In ad-
Charitable Contributions
dition, he had driven his automobile an estimated 300 miles in connection with scout work. He also had lost 38 working hours from his job with a loss in pay of $820.
12
dition, he had driven his automobile an estimated 300 miles in connection with scout work. He also had lost 38 working hours from his job with a loss in pay of $820.
E. Eugene is active in the Boy Scouts. During the past year he served as a scoutmaster. At the end of the year he calculated that he had spent $80 for various scout activities such as fund-raising drives. In ad-
Charitable Contributions
13
Automobile Expenses
Business $.565 pg 9 – 11
Moving $.24 pg 9 – 20
Medical $.24 pg 7 – 4
CharitableContribution
$.??
* agreement
14
Automobile Expenses
Business $.565 pg 9 – 11
Moving $.24 pg 9 – 20
Medical $.24 pg 7 – 4
CharitableContribution
$.14 pg 7 – 25 Note: Was $.14 last eight years as well.
15
dition, he had driven his automobile an estimated 300 miles in connection with scout work. He also had lost 38 working hours from his job with a loss in pay of $820.
E. Eugene is active in the Boy Scouts. During the past year he served as a scoutmaster. At the end of the year he calculated that he had spent $80 for various scout activities such as fund-raising drives. In ad-
Charitable Contributions
X $.14
16
dition, he had driven his automobile an estimated 300 miles in connection with scout work. He also had lost 38 working hours from his job with a loss in pay of $820.
E. Eugene is active in the Boy Scouts. During the past year he served as a scoutmaster. At the end of the year he calculated that he had spent $80 for various scout activities such as fund-raising drives. In ad-
Charitable Contributions
X $.14
17
G. Gary owned 1,000 shares of X Corporation stock for which he paid $10,000 in 1962. During the current year he contributed 600 shares of this stock to the First Church of Histown. On the date of the contribution, the shares had a market price of $25 per share. Gary’s AGI this year was $25,000.
Charitable Contributions
Determining the Contributions DeductionFor Gifts to PUBLIC Charities
Cash?
Yes
Deductible up to 50% of AGI *
No
Capital GainProperty?
Yes
No
Both tangibleand personal?
Is FMV <Adjusted Basis?
Yes
Deduct FMV up to 50% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
No
Yes
Used inexempt
function?
No
No Deduct FMVup to 30% of AGI *
Deduct Adjusted Basis up to 50% of AGI *
Yes
ChooseOne:
* Excess amounts may be carried forward for 5 years
Copyright © 2000 by M. Ray Gregg. All rights reserved.
YesDeduct FMV
up to 30% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
NoIs FMV <
Adjusted Basis?
Cash?Generally…
•Personal use
•Held > 1 year
Both tangibleand personal?
YesNo
19
Tangible?
NoNo
Determining the Contributions DeductionFor Gifts to PUBLIC Charities
Cash?
Yes
Deductible up to 50% of AGI *
No
Capital GainProperty?
Yes
No
Both tangibleand personal?
Is FMV <Adjusted Basis?
Yes
Deduct FMV up to 50% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
No
Yes
Used inexempt
function?
No
No Deduct FMVup to 30% of AGI *
Deduct Adjusted Basis up to 50% of AGI *
Yes
ChooseOne:
* Excess amounts may be carried forward for 5 years
Copyright © 2000 by M. Ray Gregg. All rights reserved.
YesDeduct FMV
up to 30% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
NoIs FMV <
Adjusted Basis?
Both tangibleand personal?
21
Personal
Personal
= non-business
= non - “real”
vs
22
“Real” Estate
23
“Real” Estate
RealtorReal-a-torRealtor
24
Personal
Personal
= non-business
= non - “real”
vs
Determining the Contributions DeductionFor Gifts to PUBLIC Charities
Cash?
Yes
Deductible up to 50% of AGI *
No
Capital GainProperty?
Yes
No
Both tangibleand personal?
Is FMV <Adjusted Basis?
Yes
Deduct FMV up to 50% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
No
Yes
Used inexempt
function?
No
No Deduct FMVup to 30% of AGI *
Deduct Adjusted Basis up to 50% of AGI *
Yes
ChooseOne:
* Excess amounts may be carried forward for 5 years
Copyright © 2000 by M. Ray Gregg. All rights reserved.
YesDeduct FMV
up to 30% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
NoIs FMV <
Adjusted Basis?
Both tangibleand personal?
No
26
Choose one:
Deduct Basis
to 30% of AGI *
to 50% of AGI *
Deduct FMV
27
to 30% of AGI *Deduct FMV
Choose one:
Deduct Basisto 50% of AGI *
600 x $25 = $15,000
30% x $25,000 = $7,500
Determining the Contributions DeductionFor Gifts to PUBLIC Charities
Cash?
Yes
Deductible up to 50% of AGI *
No
Capital GainProperty?
Yes
No
Both tangibleand personal?
Is FMV <Adjusted Basis?
Yes
Deduct FMV up to 50% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
No
Yes
Used inexempt
function?
No
No Deduct FMVup to 30% of AGI *
Deduct Adjusted Basis up to 50% of AGI *
Yes
ChooseOne:
* Excess amounts may be carried forward for 5 years
Copyright © 2000 by M. Ray Gregg. All rights reserved.
YesDeduct FMV
up to 30% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
NoIs FMV <
Adjusted Basis?
Excess amounts may beCarried forward for 5 years
29
Choose one:
Deduct Basis
to 30% of AGI *
to 50% of AGI *
Deduct FMV
600 x $10 = $6,000
50% x $25,000 = $12,500
30
600 x $10 = $6,000
to 50% of AGI *
Choose one:
Deduct Basis
to 30% of AGI *Deduct FMV
30% x $25,000 = $7,500
31
Contributions
• Problem 7 - 56
Determining the Contributions DeductionFor Gifts to PUBLIC Charities
Cash?
Yes
Deductible up to 50% of AGI *
No
Capital GainProperty?
Yes
No
Both tangibleand personal?
Is FMV <Adjusted Basis?
Yes
Deduct FMV up to 50% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
No
Yes
Used inexempt
function?
No
No Deduct FMVup to 30% of AGI *
Deduct Adjusted Basis up to 50% of AGI *
Yes
ChooseOne:
* Excess amounts may be carried forward for 5 years
Copyright © 2000 by M. Ray Gregg. All rights reserved.
YesDeduct FMV
up to 30% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
NoIs FMV <
Adjusted Basis?
Both tangibleand personal?
No
33
Choose one:
Deduct Basis
to 30% of AGI *
to 50% of AGI *
Deduct FMV
Problem 7 - 56
34
Choose one:
Deduct Basis
to 30% of AGI *
to 50% of AGI *
Deduct FMV$50,000
30% x $100,000 = $30,000
Problem 7 - 56
35
Choose one:
Deduct Basis
to 30% of AGI *
to 50% of AGI *
Deduct FMV
$40,000
50% x $100,000 = $50,000
Problem 7 - 56
36
Contributions
• Problem 7 - 56• Problem 7 - 54
Determining the Contributions DeductionFor Gifts to PUBLIC Charities
Cash?
Yes
Deductible up to 50% of AGI *
No
Capital GainProperty?
Yes
No
Both tangibleand personal?
Is FMV <Adjusted Basis?
Yes
Deduct FMV up to 50% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
No
Yes
Used inexempt
function?
No
No Deduct FMVup to 30% of AGI *
Deduct Adjusted Basis up to 50% of AGI *
Yes
ChooseOne:
* Excess amounts may be carried forward for 5 years
Copyright © 2000 by M. Ray Gregg. All rights reserved.
YesDeduct FMV
up to 30% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
NoIs FMV <
Adjusted Basis?
Both tangibleand personal?
38
Problem 7 - 54a. $40,000 FMV 30% limit
Determining the Contributions DeductionFor Gifts to PUBLIC Charities
Cash?
Yes
Deductible up to 50% of AGI *
No
Capital GainProperty?
Yes
No
Both tangibleand personal?
Is FMV <Adjusted Basis?
Yes
Deduct FMV up to 50% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
No
Yes
Used inexempt
function?
No
No Deduct FMVup to 30% of AGI *
Deduct Adjusted Basis up to 50% of AGI *
Yes
ChooseOne:
* Excess amounts may be carried forward for 5 years
Copyright © 2000 by M. Ray Gregg. All rights reserved.
YesDeduct FMV
up to 30% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
NoIs FMV <
Adjusted Basis?
40
Problem 7 - 54a. $40,000 FMV 30% limitb. $10,000 basis 50% limit
Determining the Contributions DeductionFor Gifts to PUBLIC Charities
Cash?
Yes
Deductible up to 50% of AGI *
No
Capital GainProperty?
Yes
No
Both tangibleand personal?
Is FMV <Adjusted Basis?
Yes
Deduct FMV up to 50% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
No
Yes
Used inexempt
function?
No
No Deduct FMVup to 30% of AGI *
Deduct Adjusted Basis up to 50% of AGI *
Yes
ChooseOne:
* Excess amounts may be carried forward for 5 years
Copyright © 2000 by M. Ray Gregg. All rights reserved.
YesDeduct FMV
up to 30% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
NoIs FMV <
Adjusted Basis?
42
Problem 7 - 54a. $40,000 FMV 30% limitb. $10,000 basis 50% limitc. $100,000 FMV 30% limit
Determining the Contributions DeductionFor Gifts to PUBLIC Charities
Cash?
Yes
Deductible up to 50% of AGI *
No
Capital GainProperty?
Yes
No
Both tangibleand personal?
Is FMV <Adjusted Basis?
Yes
Deduct FMV up to 50% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
No
Yes
Used inexempt
function?
No
No Deduct FMVup to 30% of AGI *
Deduct Adjusted Basis up to 50% of AGI *
Yes
ChooseOne:
* Excess amounts may be carried forward for 5 years
Copyright © 2000 by M. Ray Gregg. All rights reserved.
YesDeduct FMV
up to 30% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
NoIs FMV <
Adjusted Basis?
44
Problem 7 - 54a. $40,000 FMV 30% limitb. $10,000 basis 50% limitc. $100,000 FMV 30% limitd. $50,000 basis 50% limit
Determining the Contributions DeductionFor Gifts to PUBLIC Charities
Cash?
Yes
Deductible up to 50% of AGI *
No
Capital GainProperty?
Yes
No
Both tangibleand personal?
Is FMV <Adjusted Basis?
Yes
Deduct FMV up to 50% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
No
Yes
Used inexempt
function?
No
No Deduct FMVup to 30% of AGI *
Deduct Adjusted Basis up to 50% of AGI *
Yes
ChooseOne:
* Excess amounts may be carried forward for 5 years
Copyright © 2000 by M. Ray Gregg. All rights reserved.
YesDeduct FMV
up to 30% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
NoIs FMV <
Adjusted Basis?
46
Problem 7 - 54a. $40,000 FMV 30% limitb. $10,000 basis 50% limitc. $100,000 FMV 30% limitd. $50,000 basis 50% limite. $500 basis 50% limit
47
Contributions
• Problem 7 – 56 • Problem 7 – 54 • Problem 7 – 61
48
Problem 7 - 61Sales Price 30,000
If sold thencash donated
49
Problem 7 - 61Sales Price 30,000Basis 10,000LT Capital Gain 20,000
If sold thencash donated
50
Problem 7 - 61Sales Price 30,000Basis 10,000LT Capital Gain 20,000x CG tax rate 15%
If sold thencash donated
51
Problem 7 - 61Sales Price 30,000Basis 10,000LT Capital Gain 20,000x CG tax rate 15%Additional Tax 3,000
If sold thencash donated
52
Problem 7 - 61Sales Price 30,000Basis 10,000LT Capital Gain 20,000x CG tax rate 15%Additional Tax 3,000
Charitable Contribution 30,000
If sold thencash donated
53
Problem 7 - 61Sales Price 30,000Basis 10,000LT Capital Gain 20,000x CG tax rate 15%Additional Tax 3,000
Charitable Contribution 30,000x Marginal Rate 35%
If sold thencash donated
54
Problem 7 - 61Sales Price 30,000Basis 10,000LT Capital Gain 20,000x CG tax rate 15%Additional Tax 3,000
Charitable Contribution 30,000x Marginal Rate 35%Tax Savings 10,500
If sold thencash donated
55
Problem 7 - 61Sales Price 30,000Basis 10,000LT Capital Gain 20,000x CG tax rate 15%Additional Tax 3,000
Charitable Contribution 30,000x Marginal Rate 35%Tax Savings 10,500
Net Tax Savings -7,500
If sold thencash donated
56
Problem 7 - 61If stockdonated
Determining the Contributions DeductionFor Gifts to PUBLIC Charities
Cash?
Yes
Deductible up to 50% of AGI *
No
Capital GainProperty?
Yes
No
Both tangibleand personal?
Is FMV <Adjusted Basis?
Yes
Deduct FMV up to 50% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
No
Yes
Used inexempt
function?
No
No Deduct FMVup to 30% of AGI *
Deduct Adjusted Basis up to 50% of AGI *
Yes
ChooseOne:
* Excess amounts may be carried forward for 5 years
Copyright © 2000 by M. Ray Gregg. All rights reserved.
YesDeduct FMV
up to 30% of AGI *
Deduct Adjusted Basisup to 50% of AGI *
NoIs FMV <
Adjusted Basis?
58
Choose one:
Deduct Basis
to 30% of AGI *
to 50% of AGI *
Deduct FMV$30,000
Problem 7 - 61If stockdonated
59
Problem 7 - 61If stockdonated
Charitable Contribution 30,000
60
Problem 7 - 61If stockdonated
Charitable Contribution 30,000x Marginal Rate 35%
61
Problem 7 - 61If stockdonated
Charitable Contribution 30,000x Marginal Rate 35%Tax Savings 10,500
62
Tax Savings 10,500
Problem 7 - 61
If sold then cash donated:
If stock donated:
Net Tax Savings 7,500
69
Itemized Deductions
• Medical
• Taxes• Interest• Charitable
Contributions• Casualty Losses• Other
70